When to do your own taxes and when to pay somebody

Software is excellent at arithmetic and terrible at questions. That single sentence decides most of this for you.

If your tax year was one job, one W-2, a savings account that paid you a few dollars in interest, and the standard deduction, there's no judgment involved anywhere in your return. It's data entry. Paying a human several hundred dollars to type numbers off a form you're holding in your hand is a donation, and there are better places to send it.

If your year had a business in it, a rental, a house sale, a K-1, a move across state lines, or an inheritance, you don't have a data entry problem. You have a series of decisions, each of which has a right answer and several plausible wrong ones. That's when a person earns the fee.

The arithmetic on the fee

Do this before you call anybody.

Write down the number you'd pay a preparer. Not a guess. Call two offices in January and ask what they charge for a return like yours. Most will quote a range based on the forms involved, and the range widens fast once Schedule C or Schedule E shows up.

Now write down what software costs you for the same return. The free tier covers a plain W-2 return at most providers. The moment you add self-employment income or rental income, you're pushed into a paid tier, and the state return is usually extra on top.

Then write down your hours. Be honest. A first-time Schedule C with a home office, mileage, and a stack of 1099-NECs isn't a ninety-minute job. Call it six hours the first year, including the evening you spend reading about depreciation and regretting it.

Say the preparer quotes $450 and the software plus state comes to $130. The preparer has to be worth $320 plus six hours of your Saturday. If you bill $60 an hour doing anything else, that's a close call. If you're salaried and the six hours come out of time with your kids, the preparer just got cheaper.

Free is genuinely free, if you qualify

IRS Free File is a real program. The IRS partners with commercial software companies, and if your adjusted gross income falls under the cap for that filing season, you file your federal return at no cost. The cap moves every year, so check it at IRS.gov rather than assuming last year's number.

Above the cap, Free File Fillable Forms exist for anyone. They're the actual IRS forms in electronic format, with the math done for you and essentially no hand-holding. If you already understand your return, they work fine. If you don't, they'll let you file something wrong very efficiently.

There's also VITA and the AARP Foundation Tax-Aide network, staffed by IRS-certified volunteers, generally for lower-income filers, seniors, and people with limited English. They do simple returns well and they don't do complicated ones, which is the correct policy.

Start there. Don't pay for a return that somebody will prepare for nothing.

What actually makes a return hard

Not income. A W-2 for $300,000 is no harder than a W-2 for $40,000. Complexity comes from the shape of the money, not the size.

Things that put real judgment on the table:

• Self-employment. Schedule C, self-employment tax at 15.3% on net earnings, quarterly estimates, what counts as an ordinary and necessary expense, whether that laptop is expensed or depreciated.
• Rental property. Depreciation isn't optional, and getting it wrong follows you until you sell.
• A K-1 from a partnership or S-corp. These arrive late, they arrive amended, and they contain items that behave differently than they look.
• Selling something with a murky basis. Inherited stock, a house you improved over fifteen years, shares from an employee purchase plan where the broker reported the wrong cost.
• Two states in one year. Part-year returns and reciprocity rules are where confident people quietly overpay.
• Equity compensation. RSUs vesting, ISOs, anything with the letters AMT nearby.

One of those and you can probably still do it yourself with software and patience. Three of them and you're a client.

What you're buying from a preparer, and what you aren't

You're buying judgment, and a signature. A paid preparer must have a PTIN and must sign the return. That signature means something.

You're also buying representation, but only from the right person. Enrolled agents, CPAs, and attorneys have unlimited rights to represent you before the IRS. An uncredentialed seasonal preparer generally doesn't. If a letter shows up in eighteen months, that distinction stops being trivia. The IRS publishes a searchable directory of preparers with credentials, and it takes two minutes to use.

What you're not buying is a bigger refund. Most of the money in tax planning is made before December 31, in the retirement contribution you did or didn't make, the business entity you chose, the timing of a sale. By April, the year is closed. A preparer is scoring a game that's already been played. Anybody advertising that they'll get you more back than the other guy is selling aggression, not skill, and aggression on a tax return is a loan against your own future.

Walk out if the fee is a percentage of your refund. Walk out if they won't sign. Walk out if the refund is routed anywhere but your own bank account.

The move most people miss

Pay once, then copy it.

The first year you have a business or a rental, hire an EA or a CPA. Watch what they do. Ask for a copy of the full return including every schedule and worksheet, and ask them to walk you through the depreciation schedule specifically. That's the part that has to stay consistent for years.

Then do year two yourself with last year's return open beside you. The structure barely changes. You're filling in the same boxes with new numbers. Go back to the professional in any year with an event in it: you sold the building, you took on a partner, you moved.

Some people flip that and pay for one hour of advice in November instead of a full return in April. For a small business owner, the November hour is usually worth more.

Two things to get right regardless

An extension is an extension to file, not to pay. Form 4868 buys you until October to submit paperwork. It buys you nothing on the money, and interest starts running from the original deadline. If you're extending, send your best estimate of what you owe with it.

And the person responsible for what's on that return is you. Your signature sits at the bottom, not your preparer's. Read it before you sign. If you can't follow the logic of a number on page one, ask until you can. A good preparer will explain it without sighing.

This is general education, not tax advice, and your situation has details in it that a magazine can't see. For anything with real money attached, sit down with a CPA or an enrolled agent who'll put their name on the work.

The honest version of the choice: simple return, do it yourself and keep the $400. Complicated return, hire the professional and stop pretending April is a hobby.